What Is An MAI Appraisal?
MAI appraisals are among the most sought after appraisals in the commercial real estate world. MAI stands for Member of the Appraisal Institute, a trade organization which monitors appraisers and holds them to a higher standard than appraisers who are merely licensed and do not belong to such an organization. There are other appraisal trade organizations active in the world of real estate. However, MAI is the best known, and thus the most popular.
Technically, there is no such thing as an “MAI appraisal.” There are only appraisals performed by an appraiser who has completed the MAI Appraisal Institutes class offerings, and holds this designation. However, it’s often much easier to refer to the appraisal itself as being certified than to hold to technicalities.
An appraiser who has earned the MAI designation is qualified to and experienced in the performance of both residential and commercial properties. Many other appraisers are only qualified for residential property. At one point, lenders were likely to require that an appraisal be done by an MAI certified appraiser, or a member of another trade organization. However, this has been unlawful since 1989, as there is not federal regulation of these organizations. Still, certified appraisals can increase the chances of a favorable lending situation, since the lender will feel more comfortable. An MAI certified appraisal offers lenders a reliability that allows them to be confident in their investment.
A commercial appraisal by an MAI certified appraiser can include many things. Generally, it will provide an overview of the community, neighborhood, and general area in which the property is situated, as well as a detailed description of the site and all buildings it contains. Zoning analysis, an analysis of the highest and best use for the property, and an in depth discussion of the property’s value from several different approaches will also be included. The appraiser may also make a recommendation of which valuation is most appropriate in his or her opinion.
Appraisers tend to be conservative in their estimates. However, this does not mean that one will receive a low appraisal. An MAI certified appraisal firm assumes liability if the appraisal is too high, and the property cannot be sold for the price they recommend. The firm also assumes liability if the price is too low and the property is sold for too little money. Because of this, appraisers have a vested interest in making sure that their estimates are in the middle range. Which sales an appraiser places the most emphasis on will depend in the type of market. In a rising market, emphasis will be placed on higher recent sales, and in a falling market, that emphasis will go to lower recent sales. A good appraiser is interested in giving clients the most accurate estimate possible.